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Brocade Reports Fourth Quarter and Fiscal 2012 Earnings

Achieved Record Fourth Quarter and Full Year Results

SAN JOSE, CA -- (Marketwire) -- 11/19/12 -- Brocade® (NASDAQ: BRCD) today reported financial results for its fourth quarter and full fiscal year 2012 ended October 27, 2012. Brocade reported record fourth quarter revenue of $578 million, representing an increase of 5% year-over-year and 4% quarter-over-quarter. Revenue for fiscal year 2012 was $2,238 million, a record for the company, up 4% year-over-year. The resulting GAAP diluted earnings per share (EPS) was $0.11 for Q4 and $0.41 for fiscal 2012, on record annual net income of $195 million. Non-GAAP diluted EPS was $0.17 for Q4, the fifth consecutive quarter of year-over-year EPS growth, and $0.66 for the year.

"Q4 was an excellent quarter for Brocade and a strong ending for fiscal year 2012 during which we established a number of company records including revenue, net income, and operating cash flow," said Michael Klayko, CEO of Brocade. "Our product portfolio across all areas of our business is the strongest it has ever been and we are driving industry transformation in emerging areas of growth including virtualized data centers, cloud computing, and software-defined networking. We believe Brocade is well-positioned for continued growth in fiscal 2013."

Summary of Q4 and fiscal 2012 results:

  • Q4 2012 Storage Area Networking (SAN) business revenue, including products and services, was $394 million, up 9% year-over-year and 4% quarter-over-quarter. SAN product revenue increased 12% year-over-year and 5% quarter-over-quarter, in a seasonally strong quarter for the Company. Brocade's 16 Gbps Fibre Channel products represented nearly 35% of director and switch revenue in the quarter. Fiscal 2012 SAN business revenue was $1,578 million, up 7% year-over-year.

  • Q4 2012 IP Networking business revenue, including products and services, was $184 million, down 3% year-over-year and up 4% quarter-over-quarter. Ethernet switch revenue was up 5% year-over-year and 1% quarter-over-quarter, while routing revenue was down 10% year-over-year and up 9% quarter-over-quarter. From a customer standpoint, Federal and Service Provider revenues were both up sequentially, while Enterprise revenue was lower. Fiscal 2012 IP Networking business revenue was $659 million, down slightly year-over-year.

  • Q4 2012 GAAP gross margin was 62.4% and non-GAAP gross margin was 64.8%, compared with 59.5% and 62.9% in Q4 2011, respectively. The year-over-year improvement in gross margin was due to higher revenue, favorable product mix, and lower fixed costs. Fiscal 2012 GAAP and non-GAAP gross margin improved to 61.8% and 64.5%, respectively, compared with 59.8% and 62.5% in fiscal 2011, due to higher revenue and favorable product mix.

  • GAAP operating margin was 14.9% and non-GAAP operating margin was 22.5% in Q4 2012, compared with 9.9% and 21.0% in Q4 2011, respectively. Operating margin expanded both year-over-year and quarter-over-quarter on higher revenue and improved gross margin. Fiscal 2012 GAAP operating margin was 12.4% and non-GAAP operating margin was 20.5%, compared with 8.3% and 17.6% in fiscal 2011, respectively. The improvement in operating margin for the full year was a result of higher gross margin and lower operating expenses as a percentage of revenue.

  • Fiscal 2012 GAAP EPS of $0.41 was up 310% year-over-year on net income of $195 million, up more than 280% year-over-year. Fiscal 2012 non-GAAP EPS of $0.66 was up 33% year-over-year on non-GAAP net income of $311 million, up 26% year-over-year.

  • Average diluted shares outstanding for Q4 2012 were lower by 11.7 million from Q4 2011, principally from share repurchases during the past year, including 11.2 million shares ($60 million) repurchased during Q4 2012.

  • Operating cash flow was $210 million in Q4 2012 and $591 million in fiscal 2012, both records. During the quarter, the Company paid the remaining $30 million of its term loan and ended the year with a cash balance of $713 million and cash, net of debt, of $108 million.

Brocade management will host a conference call today at 2:30 p.m. PT (5:30 p.m. ET) to discuss fiscal fourth quarter and full year results, as well as a fiscal first quarter 2013 outlook. To access the webcast please go to www.brcd.com/events.cfm. A replay of the conference call and the prepared comments and slides will be available at www.brcd.com.

Other Q4 2012 product, customer, and partner announcements are available at http://newsroom.brocade.com/.

Financial Highlights and Additional Financial Information


                                             Q4 2012    Q3 2012    Q4 2011
                                            ---------  ---------  ---------
Revenue                                     $    578M  $    555M  $    550M
GAAP net income (loss)                      $     54M  $     43M  $     (4M)
Non-GAAP net income                         $     78M  $     67M  $     79M
GAAP net income (loss) per share -- diluted $    0.11  $    0.09  $   (0.01)
Non-GAAP EPS -- diluted                     $    0.17  $    0.14  $    0.16
GAAP gross margin                                62.4%      61.3%      59.5%
Non-GAAP gross margin                            64.8%      63.7%      62.9%
GAAP operating income                       $     86M  $     70M  $     55M
Non-GAAP operating income                   $    130M  $    108M  $    116M
GAAP operating margin                            14.9%      12.6%       9.9%
Non-GAAP operating margin                        22.5%      19.5%      21.0%
Adjusted EBITDA (1)                         $    153M  $    131M  $    138M
Cash provided by operations                 $    210M  $    113M  $    206M

  • Q4 2012 effective GAAP tax rate was 25.1% and effective non-GAAP tax rate was 32.4%.
  • Q4 2012 total SAN port shipments were approximately 1.13 million.

Please see important note of explanation on Non-GAAP measures below, including a detailed reconciliation between GAAP and Non-GAAP information in the tables included herein.


                                             Q4 2012    Q3 2012    Q4 2011
                                            ---------  ---------  ---------
As a % of total revenues
OEM revenues                                       65%        67%        62%
Channel/Direct revenues                            35%        33%        38%
10% or greater customer revenues                   46%        55%        41%
Domestic revenues                                  63%        64%        62%
International revenues                             37%        36%        38%
SAN product revenues                               59%        58%        55%
IP Networking product revenues                     26%        26%        29%
Global Services revenue                            15%        16%        16%
SAN business revenues (2)                          68%        68%        66%
IP Networking business revenues (2)                32%        32%        34%
Estimates as a % of IP Networking business
 revenues:
  Enterprise, excluding Federal                    45%        52%        57%
  Federal                                          24%        19%        18%
  Service Provider                                 31%        29%        25%


                                             Q4 2012    Q3 2012    Q4 2011
                                            ---------  ---------  ---------
Cash, cash equivalents and short-term
 investments                                $    713M  $    581M  $    415M
Deferred revenues                           $    293M  $    280M  $    270M
Capital expenditures                        $     17M  $     18M  $     20M
Total debt, net of discount                 $    601M  $    630M  $    789M
Days sales outstanding                        37 days    38 days    41 days
Employees at end of period                      4,536      4,597      4,546

(1) Adjusted EBITDA is as defined in the Term Debt Credit Agreement.
(2) SAN and IP Networking business revenues include product and global services revenues.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. In evaluating Brocade's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP.

Management believes that non-GAAP financial measures used in this press release allow management to gain a better understanding of Brocade's comparative operating performance both from period to period, and to its competitors' operating results. Management also believes these non-GAAP financial measures help indicate Brocade's baseline performance before gains, losses or charges that are considered by management to be outside ongoing operating results. Accordingly, management uses these non-GAAP financial measures for planning and forecasting of future periods and in making decisions regarding operations performance and the allocation of resources. Management believes these non-GAAP financial measures, when read in conjunction with Brocade's GAAP financials, provide useful information to investors by offering:

  • the ability to make more meaningful period-to-period comparisons of Brocade's ongoing operating results;

  • the ability to make more meaningful comparisons of Brocade's operating performance against industry and competitor companies;

  • the ability to better identify trends in Brocade's underlying business and to perform related trend analysis;

  • a better understanding of how management plans and measures Brocade's underlying business; and

  • an easier way to compare Brocade's most recent results of operations against investor and analyst financial models.

Management excludes certain gains or losses and benefits or costs in determining non-GAAP net income that are the result of infrequent events or arise outside the ordinary course of Brocade's continuing operations. Management believes that it is appropriate to evaluate Brocade's operating performance by excluding those items that are not indicative of ongoing operating results or limit comparability. Such items include: (i) provision or benefit from certain pre-acquisition litigation (ii) legal fees associated with certain pre-acquisition litigation, (iii) legal fees associated with indemnification obligations and other related costs, net, (iv) acquisition and integration costs, (v) loss on sale of property, (vi) interest expense related to the adoption of new standards relating to convertible debt instruments, (vii) original issue discount and debt issuance costs of debt related to lenders that did not participate in refinancing, and (viii) loss on sale of a subsidiary.

Management also excludes the following non-cash charges in determining non-GAAP net income (i) stock-based compensation expense and (ii) amortization of purchased intangible assets. Because of varying available valuation methodologies, subjective assumptions and the variety of award types, management believes that the exclusion of stock-based compensation allows for more accurate comparisons of our operating results to our peer companies. Management believes that the expense associated with the amortization of acquisition-related intangible assets is appropriate to be excluded because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have short lives and exclusion of the amortization expense allows comparisons of operating results that are consistent over time for Brocade's newly acquired and long-held businesses.

Finally, management believes that it is appropriate to exclude the tax effects of the items noted above in order to present a more meaningful measure of non-GAAP net income.

Limitations These non-GAAP financial measures have limitations, however, because they do not include all items of income and expense that impact the Company. Management compensates for these limitations by also considering Brocade's GAAP results. The non-GAAP financial measures that Brocade uses are not prepared in accordance with, and should not be considered an alternative to measurements required by GAAP, such as operating income, net income and net income per share, and should not be considered measurements of Brocade's liquidity. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. In addition, these non-GAAP financial measures may not be comparable to similar measurements reported by other companies.

Cautionary Statement

This press release contains statements that are forward-looking in nature, including statements regarding Brocade's future financial performance. These statements are based on current expectations on the date of this press release and involve a number of risks and uncertainties which may cause actual results to differ significantly from such estimates. The risks include, but are not limited to, changes in IT spending levels in one or more of our target markets, including the government sector, Brocade's ability to capitalize on new Brocade sales and marketing initiatives, including expanded go-to-market activities in our IP Networking business, customer acceptance of Brocade's Ethernet fabric solutions, Brocade's ability to continue to successfully innovate new products and services on a timely basis and achieve widespread market acceptance, and the effect of increasing market competition and changes in the industry. Certain of these and other risks are set forth in more detail in our Form 10-Q for the fiscal quarter ended July 28, 2012 and in "Item 1A. Risk Factors" in Brocade's Annual Report on Form 10-K for the fiscal year ended October 29, 2011. Brocade does not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.

About Brocade

Brocade (NASDAQ: BRCD) is the pure-play networking company that innovates to make high-performance networks easier to deploy, manage, and scale in the most demanding environments.

ADX, Brocade, Brocade Assurance, Brocade One, the B-wing symbol, DCX, Fabric OS, ICX, MLX, MyBrocade, SAN Health, VCS, and VDX are registered trademarks, and AnyIO, HyperEdge, NET Health, OpenScript, and The Effortless Network are trademarks of Brocade Communications Systems, Inc., in the United States and/or in other countries. Other brands, products, or service names mentioned may be trademarks of their respective owners.

© 2012 Brocade Communications Systems, Inc. All Rights Reserved.


                    BROCADE COMMUNICATIONS SYSTEMS, INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)

                            Three Months Ended        For the Year Ended
                         ------------------------  ------------------------
                         October 27,  October 29,  October 27,  October 29,
                             2012         2011         2012         2011
                         -----------  -----------  -----------  -----------
                              (In thousands, except per share amounts)
Net revenues
  Product                $   491,169  $   460,993  $ 1,890,856  $ 1,789,814
  Service                     87,188       89,479      346,914      357,628
                         -----------  -----------  -----------  -----------
    Total net revenues       578,357      550,472    2,237,770    2,147,442
                         -----------  -----------  -----------  -----------
Cost of revenues
  Product                    176,635      179,184      689,856      677,196
  Service                     41,032       43,773      164,895      186,712
                         -----------  -----------  -----------  -----------
    Total cost of
     revenues                217,667      222,957      854,751      863,908
                         -----------  -----------  -----------  -----------
Gross margin                 360,690      327,515    1,383,019    1,283,534
Operating expenses:
  Research and
   development                90,310       83,733      363,090      354,401
  Sales and marketing        150,581      145,523      608,502      608,513
  General and
   administrative             18,831       16,330       74,583       69,506
  Amortization of
   intangible assets          14,737       14,476       59,204       60,713
  Restructuring,
   integration and
   indemnification costs
   (recoveries)                  (89)          --          (89)         125
  Loss on sale of
   subsidiary                     --       12,756           --       12,756
                         -----------  -----------  -----------  -----------
    Total operating
     expenses                274,370      272,818    1,105,290    1,106,014
                         -----------  -----------  -----------  -----------
Income from operations        86,320       54,697      277,729      177,520
Interest expense             (14,684)     (13,481)     (52,488)     (97,838)
Interest and other
 income (expense), net           531          (81)        (814)        (378)
Gain (loss) on sale of
 investments and
 property, net                   (26)         (13)         (26)         124
                         -----------  -----------  -----------  -----------
Income before income tax      72,141       41,122      224,401       79,428
Income tax expense            18,140       45,446       29,220       28,818
                         -----------  -----------  -----------  -----------
Net income (loss)        $    54,001  $    (4,324) $   195,181  $    50,610
                         ===========  ===========  ===========  ===========
Net income (loss) per
 share -- basic          $      0.12  $     (0.01) $      0.43  $      0.11
                         ===========  ===========  ===========  ===========
Net income (loss) per
 share -- diluted        $      0.11  $     (0.01) $      0.41  $      0.10
                         ===========  ===========  ===========  ===========
Shares used in per share
 calculation -- basic        459,333      474,975      456,629      474,259
                         ===========  ===========  ===========  ===========
Shares used in per share
 calculation -- diluted      474,213      474,975      472,343      497,030
                         ===========  ===========  ===========  ===========


                    BROCADE COMMUNICATIONS SYSTEMS, INC.
                        CONSOLIDATED BALANCE SHEETS
                                (Unaudited)

                                                   October 27,  October 29,
                                                       2012         2011
                                                   -----------  -----------
                                                     (In thousands, except
                                                          par value)
Assets
Current assets:
  Cash and cash equivalents                        $   713,226  $   414,202
  Short-term investments                                    --          774
                                                   -----------  -----------
    Total cash, cash equivalents and short-term
     investments                                       713,226      414,976
  Accounts receivable, net of allowances for
   doubtful accounts of $827 and $1,388 at October
   27, 2012 and October 29, 2011, respectively         233,139      249,141
  Inventories                                           68,179       74,172
  Deferred tax assets                                   91,539       53,604
  Prepaid expenses and other current assets             49,496       52,308
                                                   -----------  -----------
    Total current assets                             1,155,579      844,201
Property and equipment, net                            518,940      532,384
Goodwill                                             1,624,089    1,630,967
Intangible assets, net                                 109,265      214,697
Non-current deferred tax assets                        136,175      210,028
Other assets                                            37,213       42,031
                                                   -----------  -----------
    Total assets                                   $ 3,581,261  $ 3,474,308
                                                   ===========  ===========
Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                                 $   117,350  $   109,471
  Accrued employee compensation                        182,597      118,298
  Deferred revenue                                     216,283      201,421
  Current liabilities associated with facilities
   lease losses                                            976        1,456
  Current portion of long-term debt                      1,977       40,539
  Other accrued liabilities                             91,285       94,802
                                                   -----------  -----------
    Total current liabilities                          610,468      565,987
Long-term debt, net of current portion                 599,203      748,904
Non-current liabilities associated with facilities
 lease losses                                            1,606        2,496
Non-current deferred revenue                            76,907       69,024
Non-current income tax liability                        47,370       63,593
Other non-current liabilities                            9,887       10,166
                                                   -----------  -----------
    Total liabilities                                1,345,441    1,460,170
                                                   -----------  -----------
Commitments and contingencies
Stockholders' equity:
  Preferred stock, $0.001 par value, 5,000 shares
   authorized, no shares issued and outstanding             --           --
  Common stock, $0.001 par value, 800,000 shares
   authorized: Issued and outstanding: 456,913 and
   448,022 shares at October 27, 2012 and October
   29, 2011, respectively                                  457          448
  Additional paid-in capital                         2,009,190    1,984,830
  Accumulated other comprehensive loss                  (9,864)     (11,996)
  Retained earnings                                    236,037       40,856
                                                   -----------  -----------
    Total stockholders' equity                       2,235,820    2,014,138
                                                   -----------  -----------
    Total liabilities and stockholders' equity     $ 3,581,261  $ 3,474,308
                                                   ===========  ===========


                    BROCADE COMMUNICATIONS SYSTEMS, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (Unaudited)

                                                      Three Months Ended
                                                   ------------------------
                                                   October 27,  October 29,
                                                       2012         2011
                                                   -----------  -----------
                                                        (In thousands)
Cash flows from operating activities:
  Net income (loss)                                $    54,001  $    (4,324)
  Adjustments to reconcile net income (loss) to
   net cash provided by operating activities:
    Excess tax benefits from stock-based
     compensation                                       (3,803)        (393)
    Depreciation and amortization                       47,535       50,899
    Loss on disposal of property and equipment             479          279
    Loss on sale of subsidiary                              --       12,756
    Amortization of debt issuance costs and
     original issue discount                             4,021        1,259
    Net (gains) losses on investments                     (144)           8
    Provision for doubtful accounts receivable and
     sales allowances                                    1,768        1,286
    Non-cash compensation expense                       18,423       19,671
  Changes in assets and liabilities:
    Accounts receivable                                 (3,753)      39,759
    Inventories                                          6,755        4,258
    Prepaid expenses and other assets                    1,312        2,381
    Deferred tax assets                                  1,075       (2,181)
    Accounts payable                                      (756)      (7,043)
    Accrued employee compensation                       42,125       22,400
    Deferred revenue                                    13,367        6,280
    Other accrued liabilities                           28,315       59,755
    Liabilities associated with facilities lease
     losses                                               (228)        (817)
                                                   -----------  -----------
      Net cash provided by operating activities        210,492      206,233
                                                   -----------  -----------
Cash flows from investing activities:
  Proceeds from maturities and sale of short-term
   investments                                             952           --
  Purchases of property and equipment                  (16,792)     (20,136)
  Proceeds from sale of subsidiary                          --        3,905
                                                   -----------  -----------
      Net cash used in investing activities            (15,840)     (16,231)
                                                   -----------  -----------
Cash flows from financing activities:
  Payment of principal related to the term loan        (30,000)     (50,001)
  Payment of fees related to the term loan                  --          (77)
  Proceeds from term loan                                   --            1
  Payment of principal related to capital leases          (477)        (450)
  Common stock repurchases                             (60,056)    (200,654)
  Proceeds from issuance of common stock                22,319        3,819
  Excess tax benefits from stock-based
   compensation                                          3,803          393
                                                   -----------  -----------
      Net cash used in financing activities            (64,411)    (246,969)
                                                   -----------  -----------
Effect of exchange rate fluctuations on cash and
 cash equivalents                                        2,359       (1,390)
                                                   -----------  -----------
Net increase (decrease) in cash and cash
 equivalents                                           132,600      (58,357)
Cash and cash equivalents, beginning of period         580,626      472,559
                                                   -----------  -----------
Cash and cash equivalents, end of period           $   713,226  $   414,202
                                                   ===========  ===========


                    BROCADE COMMUNICATIONS SYSTEMS, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (Unaudited)

                                                      For the Year Ended
                                                   ------------------------
                                                   October 27,  October 29,
                                                       2012         2011
                                                   -----------  -----------
                                                        (In thousands)
Cash flows from operating activities:
  Net income                                       $   195,181  $    50,610
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Excess tax benefits from stock-based
     compensation                                       (5,141)        (312)
    Depreciation and amortization                      192,218      206,352
    Loss on disposal of property and equipment             883        2,325
    Loss on sale of subsidiary                              --       12,756
    Amortization of debt issuance costs and
     original issue discount                             7,788       13,183
    Write-off of debt issuance costs and original
     issue discount on debt extinguishment                  --       25,465
    Net gains on investments                              (179)        (340)
    Provision for doubtful accounts receivable and
     sales allowances                                   11,301        9,343
    Non-cash compensation expense                       77,169       83,076
  Changes in assets and liabilities:
    Accounts receivable                                  4,701       53,561
    Inventories                                          4,656        1,327
    Prepaid expenses and other assets                    3,987       (1,688)
    Deferred tax assets                                  1,256       (2,158)
    Accounts payable                                     7,720      (38,917)
    Accrued employee compensation                       47,679          216
    Deferred revenue                                    22,744       19,579
    Other accrued liabilities                           20,277       20,878
    Liabilities associated with facilities lease
     losses                                             (1,370)      (6,024)
                                                   -----------  -----------
      Net cash provided by operating activities        590,870      449,232
                                                   -----------  -----------
Cash flows from investing activities:
  Purchases of short-term investments                       --          (38)
  Proceeds from maturities and sale of short-term
   investments                                             952        1,604
  Purchases of property and equipment                  (72,797)     (96,797)
  Proceeds from sale of subsidiary                          35        3,905
                                                   -----------  -----------
      Net cash used in investing activities            (71,810)     (91,326)
                                                   -----------  -----------
Cash flows from financing activities:
  Payment of principal related to the term loan       (190,000)    (359,898)
  Payment of fees related to the term loan                  --       (1,167)
  Proceeds from term loan                                   --      198,950
  Payment of principal related to capital leases        (1,866)      (1,761)
  Common stock repurchases                            (130,209)    (210,698)
  Proceeds from issuance of common stock                98,791       97,152
  Excess tax benefits from stock-based
   compensation                                          5,141          312
                                                   -----------  -----------
      Net cash used in financing activities           (218,143)    (277,110)
                                                   -----------  -----------
Effect of exchange rate fluctuations on cash and
 cash equivalents                                       (1,893)        (578)
                                                   -----------  -----------
Net increase in cash and cash equivalents              299,024       80,218
Cash and cash equivalents, beginning of year           414,202      333,984
                                                   -----------  -----------
Cash and cash equivalents, end of year             $   713,226  $   414,202
                                                   ===========  ===========


                    BROCADE COMMUNICATIONS SYSTEMS, INC.
            RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME
                                (Unaudited)

                                                      Three Months Ended
                                                   ------------------------
                                                   October 27,  October 29,
                                                       2012         2011
                                                   -----------  -----------
                                                     (In thousands, except
                                                      per share amounts)
Net income (loss) on a GAAP basis                  $    54,001  $    (4,324)
Adjustments:
  Stock-based compensation expense included in
   cost of revenues                                      3,388        4,345
  Amortization of intangible assets expense
   included in cost of revenues                         10,713       14,090
  Legal fees associated with certain pre-
   acquisition litigation                                   --           59
                                                   -----------  -----------
    Total gross margin adjustments                      14,101       18,494
                                                   -----------  -----------
  Legal fees recovery associated with
   indemnification obligations and other related
   costs, net                                              (89)          --
  Stock-based compensation expense included in
   research and development                              4,211        3,984
  Stock-based compensation expense included in
   sales and marketing                                   8,311        8,987
  Stock-based compensation expense included in
   general and administrative                            2,513        2,355
  Amortization of intangible assets expense
   included in operating expenses                       14,737       14,476
  Loss on sale of subsidiary                                --       12,756
                                                   -----------  -----------
    Total operating expense adjustments                 29,683       42,558
                                                   -----------  -----------
      Total operating income adjustments                43,784       61,052
  Income tax effect of adjustments                     (19,443)      22,018
                                                   -----------  -----------
Non-GAAP net income                                $    78,342  $    78,746
                                                   ===========  ===========
Non-GAAP net income per share -- basic             $      0.17  $      0.17
                                                   ===========  ===========
Non-GAAP net income per share -- diluted           $      0.17  $      0.16
                                                   ===========  ===========
Shares used in non-GAAP per share calculation --
 basic                                                 459,333      474,975
                                                   ===========  ===========
Shares used in non-GAAP per share calculation --
 diluted                                               474,213      485,895
                                                   ===========  ===========


                    BROCADE COMMUNICATIONS SYSTEMS, INC.
            RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME
                                (Unaudited)

                                                      For the Year Ended
                                                   ------------------------
                                                   October 27,  October 29,
                                                       2012         2011
                                                   -----------  -----------
                                                     (In thousands, except
                                                      per share amounts)
Net income on a GAAP basis                         $   195,181  $    50,610
Adjustments:
  Stock-based compensation expense included in
   cost of revenues                                     15,433       15,606
  Amortization of intangible assets expense
   included in cost of revenues                         46,229       57,489
  Benefit from certain pre-acquisition litigation           --      (14,335)
  Legal fees (recovery) associated with certain
   pre-acquisition litigation                             (465)         443
                                                   -----------  -----------
    Total gross margin adjustments                      61,197       59,203
                                                   -----------  -----------
  Legal fees (recovery) associated with
   indemnification obligations and other related
   costs, net                                              (89)         125
  Stock-based compensation expense included in
   research and development                             17,952       18,959
  Stock-based compensation expense included in
   sales and marketing                                  33,257       36,068
  Stock-based compensation expense included in
   general and administrative                           10,527       12,442
  Amortization of intangible assets expense
   included in operating expenses                       59,204       60,713
  Loss on sale of subsidiary                                --       12,756
                                                   -----------  -----------
    Total operating expense adjustments                120,851      141,063
                                                   -----------  -----------
      Total operating income adjustments               182,048      200,266
  Debt issuance costs and original issue discount
   of debt related to lenders that did not
   participate in refinancing                               --       25,465
  Income tax effect of adjustments                     (66,458)     (29,886)
                                                   -----------  -----------
Non-GAAP net income                                $   310,771  $   246,455
                                                   ===========  ===========
Non-GAAP net income per share -- basic             $      0.68  $      0.52
                                                   ===========  ===========
Non-GAAP net income per share -- diluted           $      0.66  $      0.50
                                                   ===========  ===========
Shares used in non-GAAP per share calculation --
 basic                                                 456,629      474,259
                                                   ===========  ===========
Shares used in non-GAAP per share calculation --
 diluted                                               472,343      497,030
                                                   ===========  ===========

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@CloudExpo Stories
“In the past year we've seen a lot of stabilization of WebRTC. You can now use it in production with a far greater degree of certainty. A lot of the real developments in the past year have been in things like the data channel, which will enable a whole new type of application," explained Peter Dunkley, Technical Director at Acision, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
“We help people build clusters, in the classical sense of the cluster. We help people put a full stack on top of every single one of those machines. We do the full bare metal install," explained Greg Bruno, Vice President of Engineering and co-founder of StackIQ, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
The cloud is becoming the de-facto way for enterprises to leverage common infrastructure while innovating and one of the biggest obstacles facing public cloud computing is security. In his session at 15th Cloud Expo, Jeff Aliber, a global marketing executive at Verizon, discussed how the best place for web security is in the cloud. Benefits include: Functions as the first layer of defense Easy operation –CNAME change Implement an integrated solution Best architecture for addressing network-l...
The BPM world is going through some evolution or changes where traditional business process management solutions really have nowhere to go in terms of development of the road map. In this demo at 15th Cloud Expo, Kyle Hansen, Director of Professional Services at AgilePoint, shows AgilePoint’s unique approach to dealing with this market circumstance by developing a rapid application composition or development framework.
AppZero has announced that its award-winning application migration software is now fully qualified within the Microsoft Azure Certified program. AppZero has undergone extensive technical evaluation with Microsoft Corp., earning its designation as Microsoft Azure Certified. As a result of AppZero's work with Microsoft, customers are able to easily find, purchase and deploy AppZero from the Azure Marketplace. With just a few clicks, users have an Azure-based solution for moving applications to the...
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com...
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
The move in recent years to cloud computing services and architectures has added significant pace to the application development and deployment environment. When enterprise IT can spin up large computing instances in just minutes, developers can also design and deploy in small time frames that were unimaginable a few years ago. The consequent move toward lean, agile, and fast development leads to the need for the development and operations sides to work very closely together. Thus, DevOps become...
"Our premise is Docker is not enough. That's not a bad thing - we actually love Docker. At ActiveState all our products are based on open source technology and Docker is an up-and-coming piece of open source technology," explained Bart Copeland, President & CEO of ActiveState Software, in this SYS-CON.tv interview at DevOps Summit at Cloud Expo®, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Verizon Enterprise Solutions is simplifying the cloud-purchasing experience for its clients, with the launch of Verizon Cloud Marketplace, a key foundational component of the company's robust ecosystem of enterprise-class technologies. The online storefront will initially feature pre-built cloud-based services from AppDynamics, Hitachi Data Systems, Juniper Networks, PfSense and Tervela. Available globally to enterprises using Verizon Cloud, Verizon Cloud Marketplace provides a one-stop shop fo...
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, p...
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover ...

ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ --  IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's

SYS-CON Events announced today that IDenticard will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. IDenticard™ is the security division of Brady Corp (NYSE: BRC), a $1.5 billion manufacturer of identification products. We have small-company values with the strength and stability of a major corporation. IDenticard offers local sales, support and service to our customers across the United States and Canada...
SYS-CON Events announced today that AIC, a leading provider of OEM/ODM server and storage solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. AIC is a leading provider of both standard OTS, off-the-shelf, and OEM/ODM server and storage solutions. With expert in-house design capabilities, validation, manufacturing and production, AIC's broad selection of products are highly flexible and are conf...
Leysin American School is an exclusive, private boarding school located in Leysin, Switzerland. Leysin selected an OpenStack-powered, private cloud as a service to manage multiple applications and provide development environments for students across the institution. Seeking to meet rigid data sovereignty and data integrity requirements while offering flexible, on-demand cloud resources to users, Leysin identified OpenStack as the clear choice to round out the school's cloud strategy. Additional...
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete...
“DevOps is really about the business. The business is under pressure today, competitively in the marketplace to respond to the expectations of the customer. The business is driving IT and the problem is that IT isn't responding fast enough," explained Mark Levy, Senior Product Marketing Manager at Serena Software, in this SYS-CON.tv interview at DevOps Summit, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Mobile commerce traffic is surpassing desktop, yet less than 20% of sales in the U.S. are mobile commerce sales. In his session at 15th Cloud Expo, Dan Franklin, Segment Manager, Commerce, at Verizon Digital Media Services, defined mobile devices and discussed how next generation means simplification. It means taking your digital content and turning it into instantly gratifying experiences.